Different Types of Savings Accounts

When you go to the bank to open a savings account, there are several different kinds that you can choose from. You should take a look at the various offerings to choose the best savings account for your needs.

There are also several factors you have to consider. Some accounts require you to maintain a high balance in order to take advantage of high interest rates. Can you afford to have your money tied up in this way for a long period of time?

The various savings accounts you can choose from include:

Instant Access Accounts – This is the ideal account if you want to have access to your savings at any time. It is the perfect choice for emergency funds. With most of these accounts you have a debit card that allows you to withdraw money from an ATM 24 hours a day. There is a limit on the amount of money you can withdraw in one day, but this is in place for your safety. You can also visit your local branch to withdraw funds from this account.

In instant access savings accountsf, the ones that pay the highest interest are usually online accounts. You transfer the funds to an account that has a debit card and the money arrives in your account within three to seven business days. You do have to access the account online to make the transfer. It may not be the best choice if you need money in a hurry.

Notice Accounts - You will earn a higher rate of interest on your money by opening a notice account. However, you must agree to lock it away for a set period of time, which means you will not have instant access to the funds if an emergency occurs. You do have to give the bank notice that you want to withdraw some or all of the money and this is usually a notice period of 90 days. By giving notice you won’t have to pay a penalty for taking out the money. That is not to say you can’t take it out earlier, though, but the bank will charge a fee for waiving the notice period.

Cash ISAa – Isas is an acronym for Individual Savings Accounts. With such an account the interest you earn on the balance is tax-free. These are not the highest interest amounts paid on savings and there is a limit on how much you can deposit in a calendar year. If you have a substantial amount of savings and you pay taxes on the interest you receive, opening such an account would save you money as well as help you earn with the interest. It is of little benefit, though, if you don’t need to have this type of tax shelter.

Regular Savings Accounts – If you just want to deposit money every month to have it as a back up in case of financial difficulty, you might want to consider opening a regular savings account. If you already have a current account at a bank, the bank can offer you a high interest savings account in this manner. They usually pay a high interest percentage on the balance, but there are conditions on this, which could result in a loss of interest if you break any of these conditions. For example, there may be a limit on the amount of money you can deposit each month and there may be a limit on the number of withdrawals you can make in a year. However, you don’t need to deposit a lot of money to open one – as little as £5 is acceptable.

National Savings Accounts – The National Savings government department offers a range of savings accounts for your needs. The money is secured and while some accounts pay interest, it is taxable.

Tags: notice accounts, instant access accounts, Regular Savings Accounts, National Savings Accounts, savings accounts, cash isa